19 February, 2016

This final section of the chapter discusses situations in which the firm might actually consider ending the relationship and how that might occur,in the next chapter we discuss situations in which the customer might decide to terminate the relationship and switch providers.

The assumption that all customers are good customers is very compatible with the belief that "the customer is always right",an almost sacrosanct tenet of business.Yet any service worker can tell you that this statement is not always true,and in some cases it may be preferable for the firm and the customer to not continue their relationship.

A company cannot target its services to all customers,some segments will be more appropriate than others.It would not be beneficial to either the company or the customer for a company to establish a relationship with a customer whose needs the company cannot meet.

For Example: A school offering a lock step,daytime MBA program would not encourage full time working people to apply for its program nor would a law firm specializing in government issues establish a relationship with individuals seeking advice on trusts and estates.

In the absence of ethical or legal mandates,organizations will prefer not to have long term relationships with unprofitable customers.Some segments of customers will not be profitable for the company even if their needs can be met by the services offered.

Example: This situation are when there are not enough customers in the segment to make it profitable to serve,when the segment cannot afford to pay the cost of the service,or when the projected revenue flows from the segment would not cover the costs incurred to originate and maintain their business.

Managers have repeated the phrase "the customer is always right" so often that you would expect it to be accepted by every employee in every service organization.So why isn't it? Perhaps because it simply is not true.The customer is not always right.No matter how frequently it is said,repeating that mantra does not make it become reality,and service employees know it.